This week, the Australian Financial Review (AFR) hosted its annual Innovation Summit involving presentations and discussions by technology sector and industry leaders.
The importance of stability in innovation policy (and in particular, the R&D Tax Incentive) was a largely uniform view among those participating in the summit.
Key notes from the presentations include the following:
- A representative from CSL noted that the timeline for commercialising drugs required thinking in 10-15 year cycles, and that frequent changes to innovation policy made it harder for companies to implement these plans, impacting company decisions on where to invest in R&D;
- Wisetech CEO Richard White noted that the availability of R&D Tax Incentives play an important role encouraging adaption of promising new technologies in the local market;
- Cochlear CEO Dig Howitt mentioned that the company had shifted some product development outside of Australia, due to more favorable policy settings. Cochlear also emphasised that stable policy around R&D investment (including a mix of tax incentives and direct investment) was important for Australia to continue to generate the high paying jobs and spillovers that come from R&D Activity;
- AGL CEO Brett Redman noted that the availability of R&D Tax Incentives were a mechanism for encouraging companies to put “skin in the game” since the risk arising from conducting R&D Activities meant commercial returns were uncertain;
- Former chairman of Innovation and Science Australia, Bill Ferris, indicated that Australian businesses should be aiming to triple R&D Expenditure by 2030. Bill indicated his view that the R&D Incentive was working well for start ups and big inventors, however expressed concern around how the incentive to increase R&D Expenditure by mid-to-large companies that make more modest investments in R&D. Mr Ferris has called for more increased direct programmes, such as through an expansion of the CRC program;
Swanson Reed commends the AFR for conducting this event which facilitates important discussion among industry leaders with respect to Innovation policy.
The largely consensus views around the need for stability of Innovation Policy should be noted by legislators and government when considering any reform to the R&D Tax Incentive, including a relaunch of reforms previously proposed. The bill to enact previously proposed reforms (Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018), did not pass through the Senate last year, and a Senate Economics Legislation Committee recommended that the bill should be deferred from consideration until further analysis of the bill’s impact is undertaken, particularly with respect to concerns around the proposed intensity threshold and refundable offset cap.